Before you can drive off the lot in a leased vehicle, you must first complete an application and get your lease approved. For your lease application to be accepted, you will likely need a favorable credit history.
There is no specific minimum credit score requirement to lease a car. Your credit score is only one factor dealers consider when deciding to approve you for a lease, and approval requirements may vary from dealer to dealer. But generally, the higher your credit score, the more likely you are to be approved and the better your lease terms will be.
What’s the Minimum Credit Score to Lease a Car?
Technically, there is no minimum credit score set for leasing a car.
Dealers have their own subscription minimums that vary from company to company. Although there is no official minimum score, most car leasing companies accept a score of 680 or higher.
The more you increase your score, the better deal you can get.
Getting approved for a lease with bad credit isn’t out of the question, but it can be costly. To avoid additional fees and limitations, you can read about How to Increase Your Credit Score by 200 Points. Know more about how to lease a car with bad credit.
What Credit Score Do You Need to Lease a Car?
The exact credit score you need to lease a car varies from dealer to dealer. The typical minimum for most dealers is 620. A score between 620 and 679 is nearly ideal, and most car dealers consider a score between 680 and 739 ideal.
According to the credit bureau Experian, customers who leased a new car during the third quarter of 2023 had an average credit score of 737. If you have a score above 680, you’re likely to receive attractive lease offers.
If your score is below that, it doesn’t mean you can’t lease a car. However, the lender may consider you a higher risk of default and you may receive less favorable lease terms than if you had a higher credit score.
Things to Check Before You Go To Lease a Car
When you decide to lease a car, it’s very important to
- Build your credit score
- Reduce balances on credit cards.
- Keep credit accounts open
- Check credit reports for errors
- Pay bills on time
Build your credit score
If you’re worried that your credit score will prevent you from getting the lease you want, build your credit score.
Reduce credit card balances
One of the quickest ways to increase your credit score is to reduce your credit card balances. Pay off as much of your credit card balances as possible. A high credit card balance can negatively affect your score. A balance less than 30 percent of your credit limit can help you reach a more attractive figure
Keep credit accounts open
Keep all your credit accounts open unless you need to close them. One of the reasons you may close a credit account is because there is an annual fee that you cannot afford. Otherwise, keep these accounts open because the longer an account is open, the more positively it may reflect on your credit score.
Check credit reports for errors
Your credit report may contain errors. Keep track of your credit history and check your personal records against your credit report records to make sure everything adds up.
Pay bills on time
Student Loan Hero says no matter what, pay all your bills on time. Pay your credit card bills, utility bills, phone bills, etc. in time to demonstrate that you are responsible with your finances. Timely payments will reflect positively on your credit score.
What is a Good Credit Score to Lease a Car?
A score of 700 may be enough to get your foot in the door in most places, but a higher score never hurts.
Those with lower scores aren’t entirely out of luck, but they may have less favorable lease terms and may have to bring more cash to closing to get their hands on the keys.
Like most financial services, the higher your credit score, the easier it will be for you to close a deal. A few months of paying off debt and paying bills on time could give you the credit score needed to lease a car on your terms.
Can I Lease a Car with a Bad Credit Score?
You can lease a car with a low credit score, but it can also cost you more money up front and in the long run. Lenders and car leasing companies use credit scores to measure a borrower’s risk. Charging more for high-risk borrowers can help lenders mitigate potential losses. If you have a poor credit then you can also check these dealerships and places to lease a car with bad credit.
A low credit score could also limit your options when choosing your new lease vehicle. If you have your eye on a specific make and model, improving your credit score before applying could help you secure it.
Are There Income Requirements to Lease a Car?
Proof of income is required when leasing a car to ensure you can make the monthly payments. Depending on your credit score, the leasing company may ask you to prove that you have regular income.
The income threshold varies by lender, but most bad credit auto loans require a minimum monthly income of $1,500 to $2,000 before lease approval. Check out what is the basic income requirements to lease a car.
What Will Happen If You Have a Credit Score Below 680?
Higher payments at signing
Just because your credit score is below 680 doesn’t mean you won’t be approved for a lease. However, you may have to pay more at signing. You may also have to make higher monthly payments, ranging from an extra $10 to an extra $125.
Reject to Lease
You may also be turned down for a lease if your credit score is below 680. If you have a lower credit score, you should also have a backup plan.
Leasing a used car
Leasing a used car is an option for those with lower credit scores. You may find it easier to get acceptance if you apply for a used car lease.
Pros and Cons of Leasing a Car
Leasing a car has many advantages. However, there are a few things drivers should keep in mind if they want to make an informed purchase.
Pros of leasing a car
You can often drive a new car for less than it would cost to finance a used one.
Regular maintenance may be included in the warranty.
You may need minimal maintenance to keep your car in good condition.
At the end of the lease, you can also purchase your leased car. Learn more about What Is a Lease Buyout and how it works.
Cons of leasing a car
The main disadvantage is that you do not own the car.
Leasing car after car can cost you more in the long run, as payments continue as long as you’re leasing.
Learn More: Should I Lease or Buy a Car?
Alternatives to Leasing a Car with Bad Credit
If bad credit prevents you from qualifying for a lease or getting favorable terms, you still have options to gain access to a car:
Lease Transfers: Also known as a car lease exchange, a lease transfer allows you to transfer the lease of a car from one driver to another. A friend or loved one could transfer your lease to you. Or you could try using a service that specializes in matching tenants with those looking to take over an existing lease.
Car sharing services: Available in many cities, car sharing services give you a way to rent a car for a short period of time (sometimes even just a few hours) and then return it when you’re done.
Working with a special financing department at a dealership: Some dealerships have special financing departments that focus on working with people with bad credit. If your dealership has one, you could see if you can work out a deal to get a car loan that’s within your ability to pay.
Does Leasing a Car Affect Your Credit Score?
Applying for a car lease is similar to applying for a car loan. The lender reviews several factors in addition to your credit score and credit report to evaluate the likelihood that you will pay what you owe as agreed. The lease application process could trigger a hard investigation, which could temporarily lower your credit score.
Once you have an active car lease, you will be responsible for making the lease payments. Missing a lease payment can negatively affect your credit score. On the other hand, if you make timely payments on your lease each month, your account can help you build credit and could potentially improve your credit score.
How to Improve Credit Score?
Bad credit can be a major barrier to many important financial decisions and opportunities. But, no matter where you start from, there are ways to work toward good credit. Here are some strategies to try:
Always pay your bills on time. Late or missed payments can negatively affect your credit score. So try to pay on time, always. You can even set up automatic payments or electronic reminders to help you stay on top of your payment due dates.
Stay well below your credit limits. Your credit utilization ratio is a measure of how much of your available credit you are using. And a high credit utilization ratio can affect your credit score. So take it from the CFPB: “Experts recommend keeping your credit utilization at no more than 30 percent of your total credit limit.”
Pay your credit card balances in full. Paying your balances in full each billing cycle can ensure that you stay well below your credit limits. And it can help you pay less interest than if you carry over your balance month after month.
Apply only for the credit you need. Too many credit applications in a short period of time could result in a lot of hard inquiries on your credit reports. And those difficult investigations could tell lenders that your financial situation has worsened.
If you have a poor credit then it’s better to improve to build your credit first before apply for lease a car. Follow these simple steps to improve your credit score in 30 days.
Can I Lease a Car Without Credit Score?
Without a credit score, lenders have no way to determine if you are financially responsible. In that case, car dealers may request:
Get a cosigner
A cosigner signs your lease to help you build your credit. If you miss a payment, it will negatively impact your co-signer. Keep this in mind and find a friend or family member who is willing to take risks with you.
Car Lease Takeover
There are other ways to get a lease. For example, Experian says you can do a lease exchange. This is when a lease belonging to one person is transferred to you. Learn the pros and cons of car lease takeover before taking any decision.
Do Negotiation
Even if you think you’ve found the best lease deal, see if the dealership is willing to negotiate. You can try to reduce monthly payments or negotiate a lease length that best suits your needs. Read more about How To Negotiate a Car Lease to get the best deals.
What is a car lease?
A car lease is essentially a long-term vehicle rental. Leases vary from dealer to dealer, but for the most part, dealers loan you a vehicle for an extended period of time, requiring you to make monthly payments during the lease period. You do not own the car you are leasing, so you must follow the rules of the car lease agreement.
People Also Ask
How can you check your credit score for free?
The three major credit bureaus (Experian, Equifax and TransUnion) allow one free credit report per year.
How do you build your credit score if you can’t lease?
If you don’t plan to lease a car for a while or are worried that when you do, the lender may turn you down, it’s best to start taking some simple steps to boost your credit score for leasing a car.
What is the lowest credit score for leasing a car?
A score of 700 may be enough to get your foot in the door in most places, but a higher score never hurts. Those with lower scores aren’t entirely out of luck, but they may have less favorable lease terms.
Can I get a car lease with a 600 credit score?
If you have a bad credit score of 600 or less, you’ll probably have trouble getting approved for a car lease.
Does Leasing a Car Hurt Your Credit?
Even after completing the lease, positive payment history can remain on your credit reports for 10 years.
What credit score is needed to lease a car without a cosigner?
Car dealers typically require you to have a FICO credit score of at least 620 to qualify for a car lease. Deals and offers get better as the score increases.